Thought for the day

"What if you gave someone a gift, and they neglected to thank you for it--would you be likely to give them another? Life is the same way. In order to attract more of the blessings that life has to offer, you must truly appreciate what you already have."

It's impossible to feel grateful and in the same moment depressed, angry or afraid. If you concentrate on finding whatever is good in every situation, your heart will soon be filled with love and understanding, a feeling that nurtures the soul. As Meister Eckhardt says, "If the only prayer you ever say in your entire life is thank you, it will be enough."

Business News

Fiscal deficit can be reined in at 5.2% of GDP only if subsidies are cut: Kelkar Report

The much awaited Kelkar Committee report was made public on Friday. The panel in its report has said that fiscal deficit can be reined in at 5.2% of GDP for the current financial year - but only if subsidies are cut.

Importantly, the report has also suggested that diesel prices should be brought to market rates by FY14.

The Committee in its report has pointed out that the excise and service tax rates should be cut to 8% over the next few years. The final view on the recommendations of the committee will be taken by the government after receiving feedback from stake holders.

While policymakers say that the committee's recommendations are fairly reasonable, they need to be approved by the finance ministry. While speaking to Bloomberg TV India, Arvind Mayaram and Economic Affairs Secretary said that the poor need to be protected with subsidies and they will be protected.

Stating that the recommendations are rational, Montek Singh Ahluwalia, Deputy Chairman, Planning Commission, said that the government has to take hard measures to bring the deficit down. Keeping in mind the committee’s observations on subsidies, Ahluwalia pointed out that the 12th five year plan had also suggested cutting down subsidies.

Kelkar Committee Report

- FY13 budget deficit may reach 6.1% of GDP
- Budget gap to be higher due to policy inaction
- Budget gap to have serious macroeconomic impact
- India needs immediate steps to cut fiscal deficit
- Estimates subsidies expenditure at 2.6% of GDP
- High deficit, inflation point to deeper crisis
- RBI liquidity infusion can be inflationary
- Subsidies spending pose greater fiscal risk
- Need to eliminate half of diesel subsidy next year
- Can limit deficit at 5.2% if subsidies cut

Aricle

Boon Or Bane ?

Man proposes, God disposes. People whom we trust, mostly deceive us and people with whom we have no expectations, often come to our rescue in odd times. Incidents about which we feel so bad and take them as misfortune, in many cases turn out to be ‘blessing in disguise’ & vice versa. At many occasions in our life, when we look back in retrospection, we get confused as to that particular incident was a boon for us on a bane.

This is a true incident that happened with my friend in Mumbai. He had to attend an important meeting and he reached the station. Knowing the condition in Mumbai, somewhere in the midst of that maddening crowd trying to get into the local train, he lost his spectacles. No sooner he got down to pick them up, the unrelenting crowd pushed him back and he was left behind at the station. He couldn’t board the train. He struggled hard to get in but just couldn’t. He was too irritated as the next train was pretty late. It was with great difficulty that he had fixed up that appointment, but now, he was helpless. He was blaming the day for the mishap. In a short while, he came to know that there was a bomb explosion in the same train which he had missed and many people had died in the same. He was absolutely dumb-founded when he heard that. Just a moment ago, he was grumbling and complaining and now he was shell-shocked! He couldn’t utter a single word ! This was the day he marked as the beginning of a new life.

Missing the train - a boon or a bane ?

World’s great orator Dale Carnegie wanted to be a football player. But due to his height, he couldn’t get the desired opportunities and so he dropped the idea of football totally. He would always complain to God about his shortcoming. He regarded height as an inadequacy but later his own fame and reputation as a author & speaker reached tremendous heights!!

THE INABILITY TO PLAY FOOTBALL -boon or bane ?

Once a king went hunting with his minister and other people. Suddenly a pointed, sharp thistle cut off his finger. His minister consoled him by saying that may be God willed it so and it was a part of His design, so it could even be a good omen. This was no consolation for the king. Highly annoyed, he ordered the minister to be put behind bars.

Thought for the day

The principal goal of education is to create men who are capable of doing new things, not simply of repeating what other generations have done.

- Jean Piaget, Swiss cognitive psychologist

Marketing Glossary

Normal goods

Normal goods have a positive income elasticity of demand so as income rise more is demand at each price level

Objectives

Measurable aims of a business set for a given period (e.g. marketing objectives for the next year)

Occasion segmentation

A basis of segmenting a market based on occasions when buyers get the idea to make a purchase, actually buy, or use a purchased item.

Opportunities

Opportunities are any feature of the external environment which creates conditions that a business can exploit to its advantage. If the business is successful in exploiting opportunities, then it will be better
placed to achieve its objectives.

Own-label brand

Own-label brands are created and owned by businesses that operate in the distribution channel – often referred to as “distributors”. Often these distributors are retailers, but not exclusively. Sometimes the retailer’s entire product range will be own-label. However, more often, the distributor will mix own-label and manufacturers brands

Company Profile

NTPC Limited

A Maharatna Company

NTPC Limited(formerly known as National Thermal Power Corporation Limited), India's largest power company, was set up in 1975 to accelerate power development in India. It is emerging as an ‘Integrated Power Major’, with a significant presence in the entire value chain of power generation business.

NTPC ranked 337th in the ‘2012, Forbes Global 2000’ ranking of the World’s biggest companies. With a current generating capacity of 39,174 MW,  NTPC plans to become a 128,000 MW company by 2032.

Overview  

India’s largest power company, NTPC was set up in 1975 to accelerate power development in India. NTPC is emerging as a diversified power major with presence in the entire value chain of the power generation business. Apart from power generation, which is the mainstay of the company, NTPC has already ventured into consultancy, power trading, ash utilisation and coal mining. NTPC ranked 337th in the ‘2012, Forbes Global 2000’ ranking of the World’s biggest companies. NTPC became a Maharatna company in May, 2010, one of the only four companies to be awarded this status.

The total installed capacity of the company is 39,174 MW (including JVs) with 16 coal based and 7 gas based stations, located across the country. In addition under JVs, 7 stations are coal based & another station uses naptha/LNG as fuel.  The company has set a target to have an installed power generating capacity of 1,28,000 MW by the year 2032. The capacity will have a diversified fuel mix comprising 56% coal, 16% Gas, 11% Nuclear and 17% Renewable Energy Sources(RES) including hydro. By 2032, non fossil fuel based generation capacity shall make up nearly 28% of NTPC’s portfolio.

HR Article

THE EMERGENCE OF BALANCED SCORE CARD

Prior to 1980s many academics and consultants became concerned that too much emphasis was being put on financial and accounting measures of performance. Management accounting systems had been perfected to produce detailed cost breakdowns and extensive variance reports. It was realized that these systems were not useful for managing a business under the circumstances resulted out of the emergence of global competitive environment during 1980s.

Product quality, delivery schedules, reliability, after-sales service, customer satisfaction became key competitive variables. But none of these were measured by the traditional performance measurement systems.

During 1980s much greater emphasis was given to incorporating non-financial performance measures as mentioned above, into the management reporting system as they provided feedback on variables that are required to compete successfully in a global economic environment. But a proliferation of performance measures emerged and has resulted I confusion when some of the measured conflicted with each other and it was possible to enhance one measure at the expensing another.

The need to link financial and non-financial measures of performance and identifying key performance measures led to the emergence of “Balanced Score Card” approach developed by Norton and Kaplan (1992) in the U.S. The Balanced score card is defined as “an approach to the provision of information to management to assist strategic policy formulation and achievement. It emphasized the need to provide the user with a set of information, which addresses all relevant areas of performance in an objective and unbiased fashion”.

Business News

Indian economy to rebound in the next 12 months, says ex-ADB chief economist

Indian economy will rebound in the next 12 to 18 months, said Dr Satish Chandra Jha, former chief economist of Asian Development Bank who was also a member of Prime Minister's Economic Advisory Council during UPA-I.

Indian economy will rebound in the next 12 to 18 months, said Dr Satish Chandra Jha, former chief economist of Asian Development Bank who was also a member of Prime Minister's Economic Advisory Council during UPA-I.

"That Prime Minister has woken up is a good sign for the country's economy. Indian economy should grow at 6.5 percent next fiscal," Jha told ET. Jha's report to Congress president Sonia Gandhi in 2003 shocked many within the Congress as he argued that India could grow at whopping 10 to 12 percent of the GDP in just a few years' time. Jha, then a member of the Congress' economic cell chaired by Manmohan Singh, was only marginally wrong as India registered upto 9 percent of the GDP growth.

During the last few months, Jha has differed with many global analysts arguing that India has increasingly become a dangerous place to invest. In a Standard & Poor's-organized seminar in Manila in May this year, Jha said India's economic problems would be a short-term phenomenon.

"I am a strong believer of the India story. But we must remember a few things. No country in the world has moved forward without FDI, with heavy doses of subsidies, and without fiscal consolidation. Those who are shouting slogans against FDI in retail have not understood how much it may benefit Indian farmers and aspiring middle class consumers," Jha said.

Jha however said he would not agree with Vijay Kelkar's recent assessment that India might go back to the 1991 era if the subsidy burden continued. "The economy has not reached that stage. There is no need to panic," Jha said.

On the recent diesel price hike, Jha said Indian government was rather late in taking the tough calls. "It's a political problem. Every government in the past has tried to bypass the issue of subsidy. But when 75% of our fuel requirement is imported, we must wake up before it becomes very late," he said.

Indian economy will rebound in the next 12 to 18 months, said Dr Satish Chandra Jha, former chief economist of Asian Development Bank who was also a member of Prime Minister's Economic Advisory Council during UPA-I.

Thought for the day

"The barrier between success is not something which exists in the real world: it is composed purely and simply of doubts about ability."

If you believe you can do something, then you almost certainly can, provided you are open to learning. Simple as that.

Marketing Glossary

Media analysis

Media analysis is a term used in advertising. It refers to an investigation into the relative effectiveness and the relative costs of using the various advertising media in an advertising campaign

Micro forecasting

Micro forecasting is concerned with detailed unit sales forecasts. This is about determining a product’s market share in a particular industry and considering what will happen to that market share in the future

Mission

A mission describes the organisation’s basic function in society, in terms of the products and services it produces for its customers.

Mission statement

 A mission statement is a formal description of the mission of a business.

Multi-channel marketing

When a business distributes its products through more than one distribution channel, this is known as multi-channel marketing. Retail chains, for example Argos, besides using the shops to distribute their products, quite often also use catalogue selling. The main purpose of multi-channel marketing is to more effectively reach different customer segments

Business News

Inflation in Eurozone eases, unemployment at new highs

Eurozone inflation eased as expected in October thanks to slower growth of energy prices, but unemployment rose to new record highs in September.

 Euro zone inflation eased as expected in October thanks to slower growth of energy prices, but unemployment rose to new record highs in September, data from the European statistics office Eurostat showed on Wednesday.

Eurostat estimated consumer inflation in the 17 countries sharing the euro was 2.5 per cent year-on-year, down from 2.6 per cent in September, though still above the European Central Bank target of below, but close to 2 per cent.

Upward pressure came mainly from more expensive energy, the prices of which increased 7.8 per cent year-on-year in October, but more slowly than in September, when they were up 9.1 per cent year-on-year.

The second biggest inflation contributor was food, which was up 3.2 per cent year-on-year, up from 2.9 per cent the month before.

Economists expect the European Central Bank to cut interest rates once more before the end of the year from the current record low of 0.75 per cent, to support the slowing economy which is likely to have sank into a recession in the third quarter.

Inflation pressures in the euro zone are low because unemployment is a record levels, rising to 11.6 per cent of the workforce in September - the highest level for the 17 countries that now make up the euro zone since 1995.

Eurostat said 18.49 million people were without jobs in the euro area, up by 146,000 from the month before.

The highest unemployment rate was in Spain, where the number of jobless rose to 25.8 per cent of the workforce in September from 25.5 per cent the month before. Among young Spaniards, under 25 years, unemployment rose to a staggering 54.2 per cent from 53.8 per cent.

Austria had the lowest unemployment rate of 4.4 per cent, followed closely by the euro zone's biggest economy, Germany, with 5.4 per cent.

HR Article

ARE YOU A MENTOR

‘Human Resources’- the magic words are murmured by everyone in one context or the other. All businesses around the world are continuously looking for better ways to recruit smart brains. Much has been said and written about the factors behind the HR factors. Many companies are considering some innovative ways to impart skills, train, re-train and motivate employees as they are the key issues. Why then in a country like India, recruitment melas are looked at as prestigious events while turnovers are more for every quarter in companies engaged in IT /ITES, Construction, Engineering, Manufacturing and the like.

‘The right man for the right job’ may be the HR mantra. On the lines of this saying, candidates are interviewed; the good or better among the brain pool is offered the letter. All is good for the first few months and slowly from somewhere a pungent smell of dissatisfaction spreads across the corporate floor. Where do the innings start? The functioning style of management, the way projects are planned, in the impressive art of delegation of work, the manner in which constructive utility of manpower is exercised and the sense of job satisfaction blended with job security are the dependable factors for a lasting cordial relationship with the employer. The distaste initially starts with absenteeism, staying away from work without permission and the final renunciation of the bondage with one’s company result in an unhappy note. The recruitment team that relaxed for a while suddenly gets into feverish action and the team members stop not till the goal is achieved. On an average, an employee with rich experience in India or abroad also shows low enthusiasm and the heat is on the down beat.

As India is emerging successful in the global arena, it has been an improvement on the economical status of an individual – billing wise or growth wise. Many strategies were evolved over a period of 8 – 10 years but it has been not easy to analyze the psychological changes and attitude of an employee on the long run. We could call this run to span a few months as is the trend. A serious look has to be given to leverage the human capital and support them more effectively. Bucket with a hole or filling the overhead tank with taps open is not a healthy trend. This effect will drastically lead to saturation level of enthusiasm in Recruiters as well. How good is our Indian HR system? It is high time that the delivery model needs a revamp.

Company Profile

Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods Company with a heritage of over 75 years in India and touches the lives of two out of three Indians.

HUL works to create a better future every day and helps people feel good, look good and get more out of life with brands and services that are good for them and good for others.

With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers, the Company is a part of the everyday life of millions of consumers across India. Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pureit.

The Company has over 16,000 employees and has an annual turnover of around Rs. 21,736 crores (financial year 2011 - 2012). HUL is a subsidiary of Unilever, one of the world’s leading suppliers of fast moving consumer goods with strong local roots in more than 100 countries across the globe with annual sales of about €46.5 billion in 2011. Unilever has about 52% shareholding in HUL.

Our vision

Unilever products touch the lives of over 2 billion people every day – whether that's through feeling great because they've got shiny hair and a brilliant smile, keeping their homes fresh and clean, or by enjoying a great cup of tea, satisfying meal or healthy snack.

A clear direction

The four pillars of our vision set out the long term direction for the company – where we want to go and how we are going to get there:

• We work to create a better future every day
• We help people feel good, look good and get more out of life with brands and services that are good for them and good for others.
• We will inspire people to take small everyday actions that can add up to a big difference for the world.
• We will develop new ways of doing business with the aim of doubling the size of our company while reducing our environmental impact.

We've always believed in the power of our brands to improve the quality of people’s lives and in doing the right thing. As our business grows, so do our responsibilities. We recognise that global challenges such as climate change concern us all. Considering the wider impact of our actions is embedded in our values and is a fundamental part of who we are.

Business News

Federal Trade Commission to look into Google smartphone patents

The FTC issued subpoenas in June seeking information from Google and smartphone rivals including Apple and Microsoft, and it questioned representatives of the companies as recently as a few weeks ago.

For more than a year, the Federal Trade Commission has been conducting a broad antitrust investigation into the way Google runs its Internet search and search advertising businesses. But in recent months it has added another investigation into Google's competitive behavior.

This time, the focus is on phones - specifically, on patents that apply to lucrative smartphone technology and the conduct of Google's Motorola Mobility subsidiary.

The FTC issued subpoenas in June seeking information from Google and smartphone rivals including Apple and Microsoft, and it questioned representatives of the companies as recently as a few weeks ago, said people briefed on the investigation.

Google owns patents covering communications and data-handling technologies that are crucial for the basic operation of smartphones and tablets - what are known as standard-essential patents. The investigators are scrutinizing the company's policies around licensing these patents and suing other companies that it claims are infringing them, said these people, who spoke on the condition that they not be identified.

Google's Motorola unit pledged to technology standards organizations that it would license the patents to others on "fair and reasonable" terms to stimulate the growth of the industry, benefiting all companies.

Bloomberg reported in June that the FTC had opened an investigation in this area. Since then, the agency inquiry has progressed, and the use of standard-essential patents has been an issue in several court cases and before Congress.

Google said in a statement on Tuesday: "We take our commitments to license on fair, reasonable and nondiscriminatory terms very seriously, and we are happy to answer any questions."

Standard-essential patents, antitrust experts say, are the modern, high-tech equivalent of certain vital railway lines in the 19th century, like the Eads rail terminal and bridge across the Mississippi in St. Louis, the subject of a historic antitrust decision in 1912.

Essential patents, like rail bridges, can become anti-competitive bottlenecks if the corporate owner withholds access to the technology or demands unreasonably high payment.

In Senate testimony in July, Edith Ramirez, an FTC commissioner, speaking of the potential abuse of standard-essential patents, said, "Holdup and the threat of holdup can deter innovation by increasing costs and uncertainty for other industry participants, including other patent holders."

Google is by no means the only smartphone company with standard-essential patents. But when it agreed to buy Motorola Mobility for $12.5 billion, Google picked up 17,000 patents, including a large trove of important patents relating to wireless devices that Motorola had committed to license.

The Google move was partly to defend itself and the smartphone makers that use its Android software, after rivals had already loaded up on patents.

A few months earlier, Apple and Microsoft had led a six-company consortium that outbid Google and paid $4.5 billion for 6,000 patents sold by Nortel Networks, a bankrupt telecommunications company.
In the smartphone patent wars, Apple has relied on its patents on design and the way a person interacts with a mobile device, which are not standard-essential patents.

HR Article

Compensation trends in India 

India’s transition to a market driven economy began in 1991 with the introduction of liberalization (pro-market economic reforms). Prior to 1991, the Government was (and still is) the biggest employer and job creator, accounting for over 85% of post-matriculation (High School) jobs. Pay was largely determined by high-level agreements between employee unions and the Government and was largely guaranteed in nature. A similar situation was prevalent in the private sector, where Government pay scales were often used as a benchmark in fixing and revising pay. Compensation packages were low on cash and high on fringe benefits such as accommodation, cars, and subsidized loans. Variable pay was largely restricted to top and senior management in few private sector enterprises. Grading systems were largely industry-wide and salary progression was purely determined by length of service.

Current trends

Productivity gains (4% in 2003-04), fast growth in real wages (40% over the last 5 years), a booming but extremely competitive economy (GDP growth of 6%), simplification of tax rules and emergence of knowledge-based industries such as Information Technology & Outsourcing Services, Healthcare etc are key factors that have influenced compensation in India post liberalization. Compensation is now characterized by a Total Cost of Employment approach, a rapid movement to flexible benefits, and increasing levels of variable pay (variable pay now forms about 7% - 35% of fixed pay). Grade structures have become organization specific and salary progression is driven by market forces and individual performance. Average salary increases over 2003-04 ranged from 5% - 20%. The average increase was 11%. While most organizations benchmark compensation nationally within a select group of competitors, a few organizations are beginning to benchmark themselves internationally at senior management levels. India has the fastest compensation increase rate in the Asian region at 11.7% and it also has the highest labour turnover in the region.

 Different compensation plans - how do they affect your financial results

With the introduction of FRS 102 Share-based Payment, companies are required to recognize the expenses of employee equity compensation schemes with effect from 1 January 2005. This article highlights the major implications to the financial results of the three most common equity compensation schemes, namely share option scheme, performance shares scheme, and Share Appreciation Rights (SAR, also known as phantom share scheme).

Key Characteristics

The key characteristics of each scheme are as follows:

Share option scheme

• The company grants employees the right to subscribe for new shares in the company at a fixed price.
• Employees are required to pay the company the exercise price in consideration for the shares.
• Employees can generally only exercise the right after remaining in service with the company for a period of time and/or after meeting certain performance targets.
• The right would generally expire after a period of 5 to 10 years from the date of the grant.

Performance share scheme

• The company grants employees shares in the company.
• Employees will generally receive the shares, at no cost, after remaining in service with the company for a period of time and/or after meeting certain performance targets.

Share Appreciation Rights

• Similar to the share option scheme except that:

Upon exercise of the option, the employees do not pay the exercise price to the company nor receive the shares; instead, they are paid the difference between the exercise price and the market price of the shares in cash.

While all three schemes require the use of fair values of the share options or shares for the recognition of the compensation expense over the vesting period, the impact on the company’s financial position and financial results is different.

Impact on net assets
The three schemes have a different effect on the net asset values of companies. Under FRS 102, share option scheme and performance share scheme are considered “equity-settled”. This means that in recognizing an expense for the compensation costs, a corresponding increase in shareholders’ equity is recognized. Hence, the net asset position of the company is unchanged. In contrast, obligations under SAR schemes are considered liabilities of the company, as there would be a cash settlement when the right is exercised. The recognition of the compensation cost under SAR results in a decrease in the net asset of the company.